Property bridging finance is considered to be one of the most effective interim methods that provide short term and immediate resources that cater to emergency or short term liquidity needs in terms of asset acquisitions.
The method works by providing a temporary loan to pay up for immediate costs such as down payments, security deposits, research costs, and professional fees to name a few. This is done while one’s permanent and main source of finance is still being processed or is yet to be available at a later date. In this sense, it bridges the main fund line and the asset acquisition thus its name.
But even an effective and seemingly seamless process can’t work to their full potential if not used properly. Many users due to lack of adequate knowledge commit crimes against property bridging finance some of which are listed below.
Crime #1: Using It to Replace Long Term Loans – Property bridging finance is an interim method that provides short term loans. It should not therefore be used as your permanent financing medium as it was not designed to work for the long term. A bridge is designed to only last from a few months to three years while long term credit goes from 5 to 30 or more.
Crime #2: Absence of Adequate Planning – You have to plan not only its use but also its procurement. Preparation is key to everything, a bridge included. This ensures that you take the right steps and not drive off the road. Part of planning includes looking for a good and reputable provider.
Crime #3: Lack of Proper Budget and Allocations – See to it that the resources you gather and receive from a bridge loan is used wisely. Although its spending is not restricted by users providing optimum flexibility, this must never be taken for granted. Budget and allocate them wisely to fit all the needs and requirements they were taken out for.
Crime #4: Failure to Map an Exit – Don’t forget to determine how you’re paying for the property bridging finance too. Providers luckily offer a very flexible means to do so as users and borrowers get to choose between paying it prior or at maturity. This means that you can close the bridge before it matures as early as you can and would want to or you may opt to wait for its maturity date which at the same time is the moment that your permanent financing comes through.